Plastec Technologies Files Annual Report on Form 20-F; Achievement of 2016 Performance Target Ensures Additional USD$16.4 Million to Be Paid to the Company

HONG KONG--()--Plastec Technologies, Ltd. - (OTCBB: PLTYF), (the “Company”), today reported audited financial results for the fiscal 2016 year ended December 31, 2016 and filed its annual report on Form 20-F for the fiscal year ended December 31, 2016 with the Securities and Exchange Commission. See financial tables at the end of this release in Hong Kong dollars (HKD). Other amounts in this press release are presented in U.S. dollars (USD) with conversion rates of US$1.0: HK$7.8 and US$1.0: RMB6.9, respectively.

2016 Sale of Assets

The Company’s financial results reflect the closing of the October 11, 2016 Share Transfer Agreement (“Agreement”) with Shanghai Yongli Belting Co., Ltd. (“SYB”) and its wholly-owned subsidiary, Shanghai Yongjing Investment Management Co., Ltd.

As a result, we no longer own Plastec International Holdings Limited (“Plastec”) or its integrated plastic manufacturing operations.

Current Operations of the Company

Following consummation of the transaction described above, our operations have been, or will be, to:

  • complete the construction of our manufacturing plant in Kai Ping, China which is intended to be disposed of to SYB prior to its official operation at a price equivalent to the capital used for its construction, subject to terms and specifics to be agreed upon by the parties concerned in due course;
  • collect rental income from certain property we own and that is being leased to one of Plastec’s subsidiaries;
  • collect any payments we may receive upon Plastec achieving the performance targets for the years ended December 31, 2016, 2017 and 2018 as described in the Agreement; and
  • explore other investment opportunities.

Confirmation of Plastec’s Achievement of Performance Target for the year ended December 31, 2016

We have recently been confirmed and acknowledged by SYB that Plastec’s audited net profit (on a consolidated basis, after deducting noncurrent gains and losses) for the year ended December 31, 2016 was HK$183,958,100, which is in excess of the performance target for the year ended December 31, 2016, set at HK$161,211,000 in the Agreement, by HK$22,747,100, or approximately 14.1%.

Accordingly, we shall be paid a further sum of RMB113,250,000, or USD $16,413,043, in due course and in accordance with the terms of the Agreement.

Impact of Sale of Assets on the Company’s Financial Statements

The disposal of Plastec represents a strategic shift and has a major effect on our results of operations. Accordingly, assets and liabilities, revenues and expenses, and cash flows related to the disposed business lines have been reclassified as discontinued operations in the consolidated financial statements for the years ended December 2016, 2015 and 2014. The consolidated balance sheets as of December 31, 2015, the consolidated statements of operations and comprehensive income and the consolidated statements of cash flows for the years ended December, 2015 and 2014 have been adjusted retrospectively to reflect this strategic shift.

Current Balance Sheet Highlights

  • USD $78.3 million in working capital at December 31, 2016, compared to USD $73.4 million at December 31, 2015.
  • Book value per share was USD $7.75 at December 31, 2016, compared to USD $9.32 at December 31, 2015.

Management Comments

Mr. Kin Sun Sze-To, Chairman of the Company, stated, “2016 was a transformational period for Plastec Technologies as a public company, as we completed the transaction with SYB and now continue to operate as a holding company. We are evaluating potential opportunities to leverage our strong capital position and means to best maximize value for shareholders.”

Forward Looking Statements

This press release contains “forward-looking statements.” These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Actual results may differ from expectations, estimates and projections and, consequently, you should not rely on these forward looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements.

       
PLASTEC TECHNOLOGIES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Audited)

(Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)

 

 

Year ended
December 31,

Year ended
December 31,

Year ended
December 31,

2014   2015   2016
HK$ HK$ HK$
 
Revenues - - -
 
Operating (expenses)/income, net
Selling, general and administrative expenses (20,022) (27,812) (18,946)
Other income 23,907 25,161 23,874
Gain on disposal of property, plant and equipment 122 - 545
Gain on disposal of subsidiary 29,125   -   -
Total operating (expenses)/income, net 33,132   (2,651)   5,473
 
Income/(loss) from operations 33,132 (2,651) 5,473
 
Interest income 963   1,028   1,276
Income/(loss) before income tax expense 34,095 (1,623) 6,749
 
Income tax expense from continuing operations (3,169)   (294)   (1,241)
Net income/(loss) from continuing operations attributable to the Company’s shareholders 30,926   (1,917)   5,508
 
Discontinued operations:

Net income from discontinued operations (including gain of HK$540,921 upon
the disposal in the year ended December 31, 2016)

157,206 163,204 717,721
Income tax expenses from discontinued operations (20,311)   (29,952)   (31,187)
 
Net income from discontinued operations attributable to the Company’s shareholders 136,895   133,252   686,534
 
Net income attributable to the Company’s shareholders 167,821 131,335 692,042
 
Other comprehensive income:
Foreign currency translation adjustment (7,764)   (2,538)   (13,490)
Comprehensive income attributable to the Company’s shareholders 160,057   128,797   678,552
 
Weighted average number of ordinary shares
Continuing operations 12,938,128 12,938,128 12,938,128
Discontinued operations 12,938,128   12,938,128   12,938,128
 
Weighted average number of diluted ordinary shares
Continuing operations 12,938,128 12,938,128 12,938,128
Discontinued operations 12,938,128   12,938,128   12,938,128
 
Basic income per share

attributable from

Continuing operations HK$2.39 (HK$0.15)

HK$0.44

Discontinued operations HK$10.61   HK$10.35   HK$53.06
 
Diluted income per share

attributable from

 

 

 

Continuing operations HK$2.39 (HK$0.15) HK$0.44
Discontinued operations HK$10.61   HK$10.35   HK$53.06
 
   
PLASTEC TECHNOLOGIES, LTD.
CONSOLIDATED BALANCE SHEETS (Audited)

(Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)

 
 

December 31,
2015

 

December 31,
2016

HK$

HK$

 

ASSETS

 
Current assets
Cash and cash equivalents 311,665 486,222
Deposits, prepayment and other receivables 4,479 4,833
Consideration receivable - 131,686
Current assets of discontinued operations 618,374   -  
Total current assets 934,518

622,741

 
Property, plant and equipment, net 145,715 153,782
Prepaid lease payments, net 18,165 16,638
Intangible assets 438 438
Non-current assets of discontinued operations 204,036   -  
Total assets 1,302,872   793,599  
 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

Current liabilities

Other payables and accruals

10,488

6,138

Tax payable

4,103

5,837

Current liabilities of discontinued operations

347,595

 

-

 

Total current liabilities

362,186

 

11,975

 
 

Commitments and contingencies

-

-

 

Shareholders’ equity

Ordinary shares (U.S.$0.001 par value; 100,000,000 authorized, 12,938,128

and 12,938,128 shares issued and outstanding as of

December 31 2015 and 2016, respectively)

101

101

Additional paid-in capital

26,049

26,049

Accumulated other comprehensive income

7,599

(5,891

)

Retained earnings

906,937

 

761,365

 

Total shareholders’ equity

940,686

 

781,624

 
 

Total liabilities and shareholders’ equity

1,302,872

 

793,599

 
 
     
PLASTEC TECHNOLOGIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Audited)

(Hong Kong dollars in thousands, except number of shares, per share data and unless otherwise stated)

 

Year ended
December 31,

Year ended
December 31,

Year ended
December 31,

2014   2015   2016
HK$ HK$ HK$
 
Operating activities
Net income 167,821 131,335 692,042
Less: Net income from discontinued operations (136,895 )   (133,252 )   (686,534 )
Net income/(loss) from continuing operations 30,926 (1,917 ) 5,508
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 7,276 8,366 8,772
Net gain on disposal of property, plant and equipment (122 ) - (545 )
Gain on disposal of a subsidiary (29,125 ) - -
Changes in operating assets and liabilities:
Trade receivables 12,546 - -
Deposits, prepayment and other receivables 3,607 (3,451 ) (144 )
Trade payables (989 ) - -
Other payables and accruals (5,101 ) 6,430 (19,802 )
Tax payables 5,286 639 1,664
Subsidiaries 7,351     (636 )   -  
Net cash provided by/(used in) continuing operations 31,655 9,431 (4,547 )
Net cash provided by discontinued operations 224,566     232,256     196,478  
Net cash provided by operating activities 256,221     241,687     191,931  
 
Investing activities
Purchase of property, plant and equipment (133,239 ) (23,809 ) -
Proceeds from disposal of property, plant and equipment 414 - 545
Sale proceeds from disposal of a subsidiary (net of cash disposed of HK$314,079 for the year 2016) 43,015     -     703,363  
Net cash (used in)/provided by continuing operations (89,810 ) (23,809 ) 703,908
Net cash provided by/(used in) discontinued operations 89,442     (126,628 )   (28,059 )
Net cash (used in)/provided by investing activities (368 )   (150,437 )   675,849  
 
Financing activities
Repurchases of shares/warrants (406 ) - -
Dividend income from subsidiaries 344,000 - -
Dividends paid (30,275 )   22,899     (837,614 )
Net cash provided by/(used in) continuing operations 313,319 22,899 (837,614 )
Net cash used in discontinued operations (381,782 )   (164,777 )   (5,815 )
Net cash used in financing activities (68,463 )   (141,878 )   (843,429 )
 
Net increase/(decrease) in cash and cash equivalents 187,390 (50,628 ) 24,351
 
Effect of exchange rate changes on cash and cash equivalents (7,764 ) (2,538 ) (13,490 )
Cash and cash equivalents, beginning of year 348,901     528,527     475,361  
Cash and cash equivalents, end of year 528,527 475,361 486,222
Less: cash and cash equivalents from discontinued operations (224,411 )   (163,696 )   -  
Cash and cash equivalents, end of year from continuing operations 304,116     311,665     486,222  
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest (income)/paid, net (963 ) 1,207 731
Income taxes paid/(refund) (2,117 )   345     (424 )
 
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
Consideration receivable -     -     131,686  
 

Contacts

Plastec Technologies, Ltd.
HL Ning, Chief Financial Officer
ning@plastec.com.hk
or
Investor Relations:
The Equity Group Inc.
Adam Prior, 212-836-9606
Senior Vice President
aprior@equityny.com
or
In China
Katherine Yao, +86 10 6587 6435
Senior Associate
kyao@equityny.com

Contacts

Plastec Technologies, Ltd.
HL Ning, Chief Financial Officer
ning@plastec.com.hk
or
Investor Relations:
The Equity Group Inc.
Adam Prior, 212-836-9606
Senior Vice President
aprior@equityny.com
or
In China
Katherine Yao, +86 10 6587 6435
Senior Associate
kyao@equityny.com